CTO Blog

The key to succeeding in the new world is to change our perspective, viewing old problems through new eyes. For example, Threadless brought a new view point to t-shirt manufacturing. Rather than pay a room full of designers to create designs, print the results and then push the product into a number of distribution channels, they took a different approach mashing together Paypal (online payments), Flickr (photos), online voting and outsourced production. Threadless created a forum where users could submit designs for users to view and vote on. If a user liked a design they can indicate whether or not they would buy it if it was made. Every few weeks Threadless selects the most popular designs and engages a contract manufacturer, sending the printed t-shirts directly to the users who indicated that they would buy them. With no investment in design, production or distribution, and a business model that has them only producing product that their clients want, Threadless was profitable in their first year an on a trajectory to quickly reach in excess of US$18 million per year.

While impressive, we might think that a mash-up approach will only work for the Web 2.0 crowd however Toyota used a similar approach to create their most popular car launch to date. Caught with a business model that excels at mass producing identical products and their clients desire for highly customised cars, Toyota mashed together their production line, Pimp My Ride, dealers and chop-shops to create the endlessly customized Scion. The production line plays to its strengths by producing only three (rather bland) models. The dealers then work with local chop-shops and clients to Pimp Their Rides, customizing each Scion to an individual’s needs. This might range some a simple paint job and wheels through to high-end stereo and anything else you can imagine. While initially only released in California, Scion was a huge success and Toyota capped production to prevent diluting the brand.

It’s not hard to extend this approach to other worlds. Take consumer mortgages for example. What started as bespoke tailoring—collecting deposits which are then provided to consumers in hand crafted loans—has rapidly become a mass customized product supported by the current generation of mortgage applications. We can take this a step further though, pulling ideas from flexible manufacturing and the military’s experience in situation awareness. Taking our knowledge of the moving parts of a mortgage, how they are related, and the business rules that surround them we can create a Threadless inspired mortgage solution, owning the core value generating business logic, connecting customers directly to the market while leveraging external services for non-core business functions. Rather than creating a mortgage application capable of supporting a limited number of possible mortgages, we can create a flexible mortgage factory capable of supporting a nearly infinite range of mortgages. Handing the solution directly to our customers creates the ultimate self-service mortgage application, allowing them to craft a mortgage to meet their specific needs.

The moral of this story is that we need to stop thinking of IT as an engineering and technology challenge and start thinking in terms of business mash-ups and enterprise bricolage, reorienting ourselves to pull ideas from the environment around them to create new solutions to old problems. Companies that can move to this new world will realize a step-change in their operational capabilities, redefining their business to become more agile, flexible and responsive while being able to focus their resources on differentiating in their chosen market. It will be hard to compete with them, as they will move and innovate so quickly that even maintaining a fast-follower strategy will be challenging. An easier solution is to ensure that you’re at the front of the pack.